Financial Data and Key Metrics Changes - Revenue totaled GBP 184.1 million, representing a 5.9% decrease year-on-year and a 3.3% increase from Q1 FY2026 [7][21] - Loss before tax for the quarter was GBP 7.2 million, compared to a profit of GBP 2.5 million in the same period last year [21] - Adjusted PBT was GBP 10.7 million, down from GBP 21.8 million year-on-year, with an adjusted PBT margin of 5.8% compared to 11.2% [22] - Adjusted diluted earnings per share were 16 pence, down from 30 pence year-on-year [23] Business Line Data and Key Metrics Changes - Revenue from the 10 largest clients accounted for 35% of total revenue, down from 36% year-on-year, with average spend per client decreasing from GBP 7.1 million to GBP 6.5 million [23] - North America accounted for 40% of revenue, Europe for 23%, the U.K. for 31%, and the rest of the world for 6% [24] - Revenue from North America decreased by 5.1%, Europe by 8.5%, and the U.K. by 9.1%, while the rest of the world increased by 21.8% [24][25] Market Data and Key Metrics Changes - The company experienced a 3.3% FX headwind impacting revenue growth, particularly from the weakening US dollar [27][43] - The company noted a lack of contribution from a significant media client in North America, affecting revenue [24] Company Strategy and Development Direction - The company is heavily investing in AI to establish itself as a leader in the AI space, focusing on recruitment, training, and evolving engagement strategies [5][6] - The Dava.Flow model is being developed to enhance client engagement and delivery speed, with a focus on outcome-based solutions [10][63] - Strategic partnerships with OpenAI and other hyperscalers are being leveraged to drive growth and innovation in AI solutions [11][12][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing investment in AI-native delivery models and next-gen talent, which is impacting margins [22][28] - The company expects revenue guidance for Q3 FY2026 to be in the range of GBP 182 million to GBP 185 million, with a constant currency revenue decrease of 4% to 2.5% year-on-year [29] - Management expressed confidence in the pipeline and the potential for growth in Q4, driven by secured deals and increased working days [34][56] Other Important Information - The company ended the quarter with 11,385 employees, a 2.4% decrease from the previous year, while continuing to upskill its AI talent base [19] - Capital expenditure for the quarter was 4.4% of revenue, significantly higher than 0.2% in the same period last year, due to investments in the Payments Accelerator [26] Q&A Session Summary Question: Fiscal year guidance and growth drivers for Q4 - Management indicated that Q4 growth is supported by secured deals and an increase in working days compared to Q3 [34] Question: Details on extensions with largest payment clients - Extensions primarily involve work in switch/gateway areas, helping clients rationalize costs and enhance value propositions [38] Question: Margin impact from increased investments - Investments in partnerships and AI initiatives are slightly higher than expected, impacting margins [42] Question: OpenAI adoption trends and displacement concerns - The company is seeing strong adoption of Enterprise ChatGPT and believes that enterprise-level challenges will drive demand for their services [46][49] Question: Top client spending and pipeline assumptions - Stability is expected among top clients, with a slight slowdown in one healthcare client anticipated [56]

Financial Data and Key Metrics Changes - Revenue totaled GBP 184.1 million, representing a 5.9% decrease year-on-year and a 3.3% increase from Q1 FY2026 [6][21] - Loss before tax for the quarter was GBP 7.2 million, compared to a profit of GBP 2.5 million in the same period last year [21] - Adjusted PBT was GBP 10.7 million, down from GBP 21.8 million year-on-year, with an adjusted PBT margin of 5.8% compared to 11.2% [22] - Adjusted diluted earnings per share were 16 pence, down from 30 pence year-on-year [23] - Adjusted free cash flow was GBP 20.1 million, down from GBP 31.6 million in the same period last year [25] Business Line Data and Key Metrics Changes - Revenue from the 10 largest clients accounted for 35% of total revenue, down from 36% year-on-year, with average spend per client decreasing from GBP 7.1 million to GBP 6.5 million [23] - North America accounted for 40% of revenue, Europe for 23%, and the UK for 31%, with North America revenue decreasing by 5.1% year-on-year [24] - Revenue from Europe declined 8.5%, primarily due to weakness in payments and mobility [24] - The rest of the world saw a revenue increase of 21.8%, driven mainly by the payments and TNT verticals [25] Market Data and Key Metrics Changes - The company experienced a 5.1% revenue decrease in constant currency terms year-on-year [21] - The UK revenue decreased by 9.1%, mainly due to the reclassification of a large payments client to North America [25] - The rest of the world increased significantly, indicating growth opportunities in emerging markets [25] Company Strategy and Development Direction - The company is heavily investing in AI to establish itself as a leader in AI-native solutions, focusing on recruitment, training, and building partnerships [5][6] - Strategic partnerships with OpenAI and other hyperscalers are being leveraged to enhance service offerings and drive demand [12][14] - The launch of Endava Rise aims to convert startup innovations into enterprise-ready solutions, enhancing the company's capabilities [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges posed by currency fluctuations and competitive pressures but remains optimistic about the long-term growth potential driven by AI adoption [27][28] - The company expects revenue guidance for Q3 FY2026 to be in the range of GBP 182 million to GBP 185 million, indicating a constant currency revenue decrease of 4% to 2.5% year-on-year [28] - For the full fiscal year 2026, revenue is expected to be between GBP 736 million and GBP 750 million, reflecting a constant currency decrease of 3.5% to 1.5% [28] Other Important Information - The company ended the quarter with 11,385 employees, a 2.4% decrease from the same period last year [19] - Capital expenditure for the quarter was 4.4% of revenue, significantly higher than 0.2% in the same period last year, due to investments in a payments accelerator [26] Q&A Session Summary Question: Fiscal year guidance and growth drivers for Q4 - Management indicated that Q4 growth is expected due to secured deals and an increase in working days compared to Q3 [31][33] Question: Details on commitments with largest payment clients - Management confirmed extensions of work with two largest payment clients, focusing on switch/gateway type projects [36] Question: Margin impact from increased investments - Management acknowledged that investments in partnerships and AI-native delivery models are heavier than expected, impacting margins [40][41] Question: OpenAI adoption trends and market displacement concerns - Management expressed confidence in the strong relationship with OpenAI and the enterprise market opportunities, addressing concerns about service displacement [43][45] Question: Top client spending and pipeline assumptions - Management noted stability in top clients, with expectations for sequential growth and a strong pipeline for Q3 and Q4 [53][58]